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Order CRTC 2001-738

Ottawa, 21 September 2001

CRTC gives final approval to procedures for the revenue-based contribution regime

Reference: 8638-C12-45/00

1.

Following the release of Decision CRTC 2000-745, Changes to the contribution regime, dated 30 November 2000, industry-working groups were established to assist in the implementation details of the changes to the contribution regime.

2.

The Process Working Group was mandated to develop guidelines and procedures for the operation of the National Contribution Fund established pursuant to Decision 2000-745 and the closure of the per minute/per line contribution regime. In addition, the Process Working Group's responsibilities included drafting a procedures document to list the rules for both aspects of the working group's mandate.

3.

In April 2001, the working group submitted its draft procedures document for review by the CRTC Interconnection Steering Committee (CISC) members and the members of the Contribution Collection Mechanism Co-ordination Committee, which was struck to co-ordinate activities to help implement Decision 2000-745. Given the need to put procedures in place as quickly as possible, in Order CRTC 2001-338, Revenue-based contribution regime interim procedures, dated 30 April 2001, the Commission granted interim approval to the draft procedures document. However, at that time, the two committees had not had the chance to review the document.

4.

Following the release of Order 2001-338, both committees reviewed the interim document and submitted their proposed changes to the Process Working Group.

5.

On 12 July 2001, the revised procedures document was tabled at a joint meeting of the Co-ordination Committee and the CISC members. At that meeting, the industry reached consensus on the procedures document and filed the document with the Commission for consideration.

6.

The Commission hereby approves, on a final basis, the attached Procedures for operation of the revenue-based contribution regime document.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca

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4 July 2001

 

Procedures for operation of the revenue-based contribution regime mandated by the CRTC pursuant to Decision 2000-745 dated 30 November 2000

 

This document comprises the Procedures for the purposes of the National Contribution Fund Administration Agreement dated 1 January 2001 (the "National CFA Agreement") between Canadian Portable Contribution Consortium Inc. ("CPCC"), of the first part, Progestic International Inc., in its capacity as the administrator (the "CFA") of the National Contribution Fund (the "NCF"), of the second part, each telecommunications service provider ("TSP") as shall be determined by the CRTC from time to time to be a Required Contributor and which shall have become a party to the National CFA Agreement through execution and delivery to the CFA of a Required Contributor Accession Agreement in the manner provided in Section 10.14(a) of the National CFA Agreement, of the third part, and each TSP as shall be determined by the CRTC from time to time to be an Eligible Recipient and which shall have become a party to the National CFA Agreement through execution and delivery to the CFA of an Eligible Recipient Accession Agreement in the manner provided in Section 10.14(b) of the National CFA Agreement, of the fourth part.

 

Approved by the Board of Directors of Canadian Portable Contribution
Consortium Inc.: 2001

 

Approved by the CRTC: 2001

 

ARTICLE ONE

 

GENERAL

  1.1 The purpose of these Procedures is to prescribe the rules for:
 

· the operation of the National Contribution Fund, established by the CRTC pursuant to Decision CRTC 2000-745; and

 

· the closure of the per-minute/per-line contribution regime that operated until 31 December 2000 and provide a reconciliation and settlement of the contribution for the first quarter of 2001.

  1.2 The Procedures are the "Procedures" referred to in the National CFA Agreement and form part of the contractual obligations entered into by the signatories of that contract.
  1.3 These Procedures have been established through a consultative process overseen by the CRTC. The consensus reports of this consultative process have been filed with, and approved by, the CRTC. Certain points on which a consensus could not be achieved were filed with, and resolved by, the CRTC.
  1.4 For administrative convenience, it has been agreed that the CPCC has the power to amend these Procedures from time to time subject to the approval of the CRTC. Parties subject to these Procedures will be given adequate notice of proposed changes through the distribution of the agenda and minutes of directors meetings of the CPCC and by representation through one or more directors of the CPCC. In addition, the CRTC may, from time to time, amend the provisions of Appendix 1 to these Procedures and references in these Procedures shall be taken to be references to the then most recent version of Appendix 1 so issued by the CRTC.
  1.5 Decision 2000-745 stated that the Commission would perform certain tasks. For completeness, the tasks undertaken by the CRTC have also been described in these Procedures.
  1.6 Headings: The division of these Procedures into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of these Procedures. The terms "hereof", "hereunder" and similar expressions refer to these Procedures and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles, Sections and Appendices are to Articles and Sections of, and Appendices, to these Procedures.
  1.7 Extended meanings: In these Procedures, words importing the singular number also include the plural and vice versa; words importing any gender include all genders and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations.
  1.8 Accounting principles: Wherever in these Procedures reference is made to a calculation to be made or an action to be taken in accordance with generally accepted accounting principles, such reference shall be deemed to be to the generally accepted accounting principles from time to time approved by the Canadian Institute of Chartered Accountants ("CICA"), or any successor institute, applicable as at the date on which such calculation or action is made or taken or required to be made or taken in accordance with generally accepted accounting principles.
  1.9 Interest calculations and payments: Unless otherwise stated, wherever in these Procedures reference is made to a rate of interest "per annum" or a similar expression is used, such interest shall be calculated on the basis of a calendar year of 365 days or 366 days, as the case may be, and using the nominal rate method of calculation, and will not be calculated using the effective rate method of calculation or on any other basis that gives effect to the principle of deemed reinvestment of interest. All late payment charges and interest to be payable hereunder will be paid both before and after default and/or judgement, if any, until payment thereof, and interest will accrue on overdue interest, if any, compounded monthly.
  1.10 Currency: All references to currency herein are to the lawful money of Canada.
  1.11 Action on business day: Whenever pursuant to these Procedures an action is to be taken by a specific date and such specific date is not a business day, such action shall be taken on the first business day following such specific date.

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ARTICLE TWO

 

DEFINITIONS

  2.1 Definitions
 

In these Procedures, unless something in the subject matter or context is inconsistent therewith, the following terms shall have the respective meanings ascribed to them in this Section 2.1:

 

"Auditor" means Ernst & Young LLP, or such other firm of chartered accountants licensed to practise as public accountants in each of the Provinces of Canada as may be appointed by the Consortium from time to time as Auditor for purposes of the National Contribution Fund and these Procedures.

 

"Banded NAS"means a geographic area (including a number of non-contiguous geographic areas) within the Incumbent Local Exchange Carriers ("ILEC") operating territory in which the CRTC has found the costs of providing telephone exchange service to be reasonably homogenous for the purpose of the distribution of the Territorial Central Sub-funds and the National Contribution Fund and which the CRTC has designated as a Band pursuant to Telecom Decision CRTC 97-18, as varied or amended by the CRTC from time to time.

 

"Bundled services" shall have the meaning ascribed thereto in Appendix 1.

 

"Business Day" means any day of the week other than Saturday, Sunday or other day on which banks operating in the province where the office of the CFA administering this Agreement shall be located from time to time are authorized by law to close.

 

"Canadian Non-telecommunications Revenues" shall have the meaning ascribed thereto in Appendix 1.

 

"Canadian Telecommunications Services Revenues" or "CTSR" shall have the meaning ascribed thereto in Appendix 1.

 

"CFA" means Progestic International Inc., including any replacement third-party administrator of the National Contribution Fund appointed by the Consortium from time to time and designated as such by the CRTC pursuant to the Telecommunications Act (Canada).

 

"CFA payment" means the amount payable to the CFA out of the National Contribution Fund at any time for services performed and expenses incurred by the CFA hereunder or pursuant to the contract under which the CFA is appointed, as amended from time to time, such amount to be determined as provided in such contract or these Procedures.

 

"Consortium" or "CPCC" means Canadian Portable Contribution Consortium Inc., a corporation incorporated under the provisions of the Canada Business Corporations Act, established, inter alia, to contract with, and oversee the administration of the National CFA Agreement and these Procedures, by the CFA.

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"Consortium costs" means costs and expenses incurred by the Consortium in fulfilling its mandate with respect to the National CFA Agreement and these Procedures.

 

"Contribution-Eligible Revenues" means, with respect to each TSP, and in respect of each year, the Contribution-Eligible Revenues of such TSP calculated in accordance with Appendix 1.

 

"CRTC" means the Canadian Radio-television and Telecommunications Commission.

 

"Decision 97-8" means Telecom Decision CRTC 97-8 dated 1 May 1997 and references in the Procedures to such decision shall be deemed to include, as appropriate, such decision as varied, amended, refined and/or supplemented by the CRTC in proceedings, decision, orders or interpretations made or issued thereafter and/or arising therefrom.

 

"Decision 2000-745" means Decision CRTC 2000-745 dated 30 November 2000 and references in these Procedures to such decision shall be deemed to include, as appropriate, such decision as varied, amended, refined and/or supplemented by the CRTC in proceedings, decisions, orders or interpretations made or issued thereafter and/or arising therefrom.

 

"Effective date" means 1 January 2001.

 

"Eligible Recipient" means each TSP that has been determined by the CRTC from time to time to be entitled to receive payments from time to time out of the National Contribution Fund.

 

"Eligible Recipient Accession Agreement" means a document by which a TSP that is an Eligible Recipient shall become a party to the National CFA Agreement, such agreement to be substantially in the form of Schedule "B" to the National CFA Agreement.

 

"Existing CFA Agreements" means (i) the eight central funds administration agreements dated 31 December 1997, as amended, establishing Territorial Central Sub-funds in the operating territories of the incumbent local exchange carriers referred to in paragraph 2 of Decision 97-8; (ii) the Central Fund Administration Agreement dated 1 July 1998, as amended, establishing a Territorial Central Sub-fund in the operating territory of TELUS Communications (Edmonton) Inc. pursuant to Telecom Decision CRTC 98-6 dated 7 May 1998; and (iii) the memorandum of understanding dated 1 January 2001 between the Consortium, the CFA and each of Saskatchewan Telecommunications, Québec-Téléphone and Télébec ltée, establishing a Territorial Central Fund in the operating territories of each of such companies, pursuant to paragraph 121 of Decision 2000-745.

 

"Inter-carrier payments" shall have the meaning ascribed thereto in Appendix 1.

 

"Late Payment Charge" means, with respect to any amount to which such a charge is applicable in accordance with the provisions of these Procedures, a charge equal to one percent (1%) per month (12.68% per annum) applied to the amount in question commencing as from the due date of the relevant payment, compounded monthly.

 

"National Contribution Fund" or "NCF" means the National Contribution Fund required to be created by the CRTC pursuant to Decision 2000-745, and established by the National CFA Agreement and these Procedures.

 

"National Subsidy Requirement" or "NSR" means, in respect of each year, that amount, as determined by the CRTC from time to time, to be the total of the Total Subsidy Requirements for all local exchange carrier territories in such year.

 

"Non-Canadian Revenues" shall have the meaning ascribed thereto in Appendix 1.

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"Payment and Receipt Advice" means a notice in writing from the CFA to each Required Contributor pursuant to Section 5.3 of these Procedures.

 

"Per-Minute Regime" means the per-minute and per-circuit contribution regime established by the CRTC pursuant to Decision 97-8 and in proceedings following thereafter and/or arising therefrom and documented by the Existing CFA Agreements.

 

"Required Contributor" means each TSP which has been determined by the CRTC from time to time to be required to contribute to the National Contribution Fund based upon such TSP's Canadian Telecommunications Services Revenues.

 

"Required Contributor Accession Agreement" means a document by which a TSP that is a Required Contributor shall become a party to the National CFA Agreement; such agreement to be substantially in the form of Schedule "A" to the National CFA Agreement.

 

"Retail Internet Service" shall have the meaning ascribed thereto in Appendix 1.

 

"Retail Paging Service" shall have the meaning ascribed thereto in Appendix 1.

 

"Revenue Percentage Charge" means the percentage charge from time to time established by the CRTC to be applied to each Required Contributor's Canadian Telecommunications Services Revenues less allowable deductions for purposes of determining contribution payable by such Required Contributor to the National Contribution Fund for purposes of the National CFA Agreement and these Procedures.

 

"Telecommunications Services Provider" or "TSP" means a "telecommunications service provider" as defined in the Telecommunications Act (Canada). As outlined in Decision 2000-745 paragraph 88, Telecommunications Service Providers, include ILECs, alternate provider of long-distance services ("APLDS"), competitive local exchange carriers ("CLECs"), resellers, wireless service providers ("WSPs"), international licensees, satellite service providers, Internet service providers (if a telecommunications service is provided), payphone providers, data and private line service providers.

 

"Territorial Central Sub-funds" means the central funds established pursuant to the Existing CFA Agreements.

 

"Total Operating Revenues" shall have the meaning ascribed thereto in Appendix 1.

 

"Total Subsidy Requirement" or "TSR" means, in respect of each year and each local exchange carrier providing local exchange service in high-cost bands, the total of the subsidy requirements of such local exchange carrier for such year, determined in accordance with rules and Procedures of the CRTC from time to time in effect.

 

"TSP User Manual" means a document issued by the CFA that describes the procedures for reporting and the functionality of the Internet Website used to report revenue based contribution information to the CFA.

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ARTICLE THREE

 

REPORTING AND VERIFICATION OF CANADIAN TELECOMMUNICATIONS SERVICES REVENUES

  3.1 Each TSP is required to file with the CRTC on or before 31 March of each year (30 April 2001 with respect to year 2000 revenues) a calculation of Canadian Telecommunications Services Revenues and further, the calculation of the Contribution-Eligible Revenues based on the financial data of the fiscal year ending in the immediate prior calendar year. The format and definition of the report is included in Appendix 1 of these Procedures along with detailed instructions for completion. Each TSP reporting must complete an individual report and file a separate report with supporting information for each related company (as defined in the CICA Handbook Section 3840) that is also a TSP. The CRTC can request assistance from Industry Groups, the CFA and CPCC to identify all TSPs who fit the requirement for reporting.
  3.2 Each filing by a TSP with the CRTC pursuant to Section 3.1 shall be accompanied by:
 

· a compliance statement to ensure the integrity of the information filed. A TSP with audited financial statements is required to have their external auditors attest to the accuracy of the information filed. A TSP that does not have audited financial statements can have an external auditor attest to the accuracy of the information or the TSP can provide an affidavit, signed by an officer of the company, attesting to the accuracy of the information filed;

 

· a copy of the TSP audited financial statements for the immediate prior calendar year. For a TSP that does not have audited financial statements, a copy of the financial statements accompanied with an affidavit, signed by an officer of the company, attesting to the accuracy of the financial statements will be accepted; and

 

· a detailed list of Inter-carrier payments and Non-Contribution-Eligible Revenues.

  3.3 In addition to the financial data, the local exchange carriers with network access services ("NAS") are to report estimated eligible NAS by band, based on the actual NAS per band from December of the prior year.
  3.4 Following review by the CRTC of information provided pursuant to Sections 3.1, 3.2 and 3.3 by a TSP, the CRTC shall, pursuant to Decision 2000-745, determine if a TSP is a Required Contributor for the current calendar year for purposes of the National CFA Agreement and these Procedures. In the event that the CRTC determines that the TSP is a Required Contributor, the CRTC will notify such TSP and the CFA that such TSP is a Required Contributor for the year.
  3.5 To the extent that a TSP becomes a Required Contributor and has not previously executed and delivered to the CFA a Required Contributor Accession Agreement, whereby such Required Contributor shall become a party to the National CFA Agreement, such Required Contributor shall execute and deliver to the CFA such Required Contributor Accession Agreement within thirty (30) days of such determination by the CRTC.
  3.6 The CRTC will for 2001, pursuant to Decision 2000-745, calculate the Revenue Percentage Charge applicable to the current year based on the information provided in Sections 3.1 and 3.3. The CRTC will advise the CFA and each TSP identified as a Required Contributor of the Revenue Percentage Charge as well as any subsequent revisions to the Revenue Percentage Charge. In addition, the CRTC will provide to the CFA an estimate of the contribution payable from each Required Contributor.
  3.7 The CFA will implement the new Revenue Percentage Charge in the next month following the determination by the CRTC. The CFA will provide to each Required Contributor contributing to the National Contribution Fund a calculation of the adjustment to the amount paid by such Required Contributor for the period from the beginning of the year to the month immediately prior to the implementation of the new Revenue Percentage Charge for the year. The adjustment calculations will be completed by the CFA within sixty (60) days of the issuance by the CRTC of the new Revenue Percentage Charge and issued to the Required Contributors. The resulting contribution adjustment will be prorated over the remaining months of the year.
  3.8 Subsequent changes to the Revenue Percentage Charge may be required due to either an under-funding or over-funding of the National Contribution Fund. Pursuant to Decision 2000-745, these changes are to be corrected in the subsequent year's calculation for the Revenue Percentage Charge. The CFA will report to the CRTC, on a quarterly basis, the status of the National Contribution Fund. If deemed necessary, the CRTC will provide direction to the CFA in regard to the modification of the Revenue Percentage Charge. All modifications to the Revenue Percentage Charge, pursuant to this Section, will be processed as an adjustment to the rate going forward and no retroactive changes will be made.

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ARTICLE FOUR

 

REPORTING OBLIGATIONS OF REQUIRED CONTRIBUTORS

  4.1 Reporting of Contribution-Eligible Revenues and eligible NAS by Band is to be completed on a monthly basis by all TSPs who have been identified as a Required Contributor based on the schedule in Section 4.4. The reporting will be completed through the CFA in accordance with the TSP User Manual. Appendix 1 includes a sample of the reporting format with the appropriate definitions and guidelines for completion as approved by the CRTC for each section of the Report.
  4.2 The monthly reporting shall be submitted by each Required Contributor based on a consolidated basis and/or reporting by each related company that is a TSP. Each Required Contributor that reports on a consolidated basis must advise the CRTC and the CFA of the reporting structure and shall also provide the CFA supporting reports for each related company (as defined in the CICA Handbook, Section 3840) that is also a TSP. If the monthly reporting for the related companies is unduly onerous, the TSP may file a request with the CRTC to reduce the reporting requirements.
  4.3 Each TSP shall provide to the CFA the current contact information including the contact name, the telephone number, fax number and email address for the responsible person for the monthly reporting of contribution and will provide an alternate contact who can act as a replacement.
  4.4 Required Contributors will report to the National Contribution Fund based on a reporting schedule to be issued by the CFA before the 10th Business Day of January of each year. The schedule will follow the pattern of:

Contributors reporting based on Section 4.1

28th day of the following month

Contribution payments from non-recipients

+ 8 business days

CFA calculation on payments to recipients

+ 4 business days

Net contribution payments from recipients

+ 3 business days

Final distribution of funds to recipients

+ 4 business days

  For greater clarity, see the TSP User Manual for a sample of the schedule that will be issued by the CFA annually.
  4.5 If an adjustment for a previous reporting period in the current year is deemed necessary by a Required Contributor, the Required Contributor will report the adjustment on a separate monthly reporting form documented and provided in Appendix 3 of the TSP User Manual. The CFA will aggregate the adjustment with the current reporting period for inclusion in the National Contribution Fund. No Late Payment Charges or penalties will be assessed with the reporting of adjustments that are either completed within six (6) months of the period being adjusted or have an impact on the National Contribution Fund for the month impacted of less than one percent (1%). In the event that the adjustment is completed in a subsequent year, the payment will be calculated at the rate that was in effect in the month that the payment was due. Late Payment Charges are applied to any amounts in default commencing as of the relevant due date and compounded monthly.
  4.6 All Eligible Recipients that operate as local exchange carriers ("LEC") will report by telco territory (being the operating territories referred to in the Existing CFA Agreements), the number of eligible NAS by telco band using the NAS reporting form and in accordance with the instructions from the TSP User Manual. The TSP must provide to the CFA the LEC approval to operate within each telco territory issued by the CRTC before the CFA will process claims on the National Contribution Fund. The NAS reporting will be completed according to the same schedule as the monthly reporting of Contribution-Eligible Revenues as specified in Section 4.4.
  4.7 Payments to the National Contribution Fund based on information received from the CFA will be transferred to the CFA in accordance with the process in the TSP User Manual.
  4.8 Security for payment obligations
 

(a) Recognizing that timely payment by Required Contributors to the CFA of amounts payable by Required Contributors to the CFA hereunder is essential to the orderly operation of the National Contribution Fund, in the event a Required Contributor fails to make payment to the CFA of the amount so required to be paid by it, in full and on the relevant due date or within two (2) business days thereafter (in this Section 4.8 called a "Defaulting Contributor"), the CFA shall make all reasonable efforts to advise such Defaulting Contributor of (i) the fact that such Defaulting Contributor has failed to make payment of an amount due to the CFA hereunder, and (ii) the amount of the required payment. If, within five (5) business days of the CFA having given the notice referred to in the immediately preceding sentence to a Defaulting Contributor, such Defaulting Contributor shall have failed to remit such amount to the CFA (together with any applicable Late Payment Charges), such Defaulting Contributor shall provide to the CFA, within the next ten (10) business days, security for such Defaulting Contributor's payment obligations to the CFA hereunder in accordance with these Procedures. Security provided by a Defaulting Contributor pursuant to this Section 4.8(a) shall remain in effect until such Defaulting Contributor shall have paid, in full and on the relevant due dates or within two (2) business days thereafter, all amounts required to be paid by such Defaulting Contributor to the CFA hereunder in respect of twelve (12) consecutive payment periods following such failure to pay. In the event security provided by a Defaulting Contributor to the CFA pursuant to this Section 4.8(a) shall thereafter have been released and such Defaulting Contributor shall again default in making due and punctual payment of amounts due to the CFA hereunder, the provisions of this Section 4.8(a) shall again be applicable in respect of any subsequent failure on the part of such Defaulting Contributor to make full and timely payment of amounts payable by such Defaulting Contributor to the CFA hereunder.

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(b) Security required of a Defaulting Contributor hereunder shall consist of readily realizable security, such as a deposit of cash or marketable securities, an irrevocable letter of credit or letter of guarantee issued by a Canadian chartered bank, an irrevocable performance bond issued by a Canadian issuer of performance bonds, or such other form of readily realizable security as may be satisfactory to the CFA, acting reasonably (a "Credit"). The Credit shall be in form and substance satisfactory to the CFA and shall name the CFA, for and on behalf of the National Contribution Fund, as beneficiary. The Credit provided by a Defaulting Contributor hereunder shall be in a principal amount equal to the sum of the net amounts to become payable by such Required Contributor to the CFA in accordance with these Procedures in respect of the most recent three (3) payment periods preceding the due date of the payment that gave rise to the obligation of such Defaulting Contributor to provide security hereunder (or three times the net amount payable by such Defaulting Contributor in respect of the payment period preceding the due date of the payment that gave rise to the obligation of such Defaulting Contributor to provide security hereunder in the case of a Defaulting Contributor, which shall not have been at such time a Required Contributor hereunder for at least three payment periods, as the case may be), as determined in good faith by the CFA. Partial drawings under any such Credit shall be permitted. Such Credit shall entitle the CFA, for and on behalf of the National Contribution Fund, to draw against the Credit, or to demand payment by the issuer of the Credit, as the case may be, for any amount payable by such Defaulting Contributor to the CFA pursuant to these Procedures, up to the undrawn principal amount of the Credit. The CFA shall be entitled to draw upon the Credit, in the case of a Credit issued by a third party, upon provision of a written statement of the CFA, addressed to the issuer of the Credit, as to non-payment of the corresponding amounts pursuant to the provisions of these Procedures by the Defaulting Contributor on whose behalf the Credit was issued, without any requirement that the CFA pursue or exhaust any remedies or recourses it may have against such Defaulting Contributor before being entitled to require payment under such Credit. Despite the foregoing, the CFA may not call for payment under any such Credit until the relevant amount, if in respect of contribution payable by such Defaulting Contributor to the CFA hereunder, has been overdue for not less than two (2) business days following the relevant due date. Promptly following the making of any such drawing or demand for payment under any such Credit, the CFA shall advise the Defaulting Contributor and the CRTC of the making of such drawing or demand for payment. Each Defaulting Contributor from whom a Credit is required pursuant to the provisions of these Procedures shall cause the Credit, or a replacement thereof satisfactory in form and in substance to the CFA, acting reasonably, to be maintained in force for so long as required by this Section 4.8.

 

(c) A Defaulting Contributor required to provide a Credit hereunder shall arrange for an increase in the undrawn principal amount of the Credit provided by it or issued on its behalf hereunder in the event that the undrawn principal amount payable under any such Credit shall, at any time, be less than eighty-five percent (85%) of the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures, as notified to such Defaulting Contributor by the CFA. Any such increase shall be for an amount sufficient to ensure that the undrawn principal amount of the Credit respecting such Defaulting Contributor's obligations hereunder shall not be less than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods. Each Defaulting Contributor shall cause the undrawn principal amount of any Credit provided by it or issued on its behalf hereunder to be so increased, or to otherwise post readily realizable security for performance of its obligations hereunder in form and substance satisfactory to the CFA, acting reasonably, within ten (10) business days of the undrawn principal amount of such Credit ceasing to be equal to at least eighty-five percent (85%) of the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures. For the avoidance of doubt, in the event the CFA shall make a drawing or a demand for payment under a Credit in accordance with the provisions of these Procedures and, following the drawing or the payment by the financial institution or other party which issued such Credit, the then remaining undrawn balance of such Credit shall be less than the sum of the net amounts payable by the Defaulting Contributor on whose behalf the Credit has been issued to the CFA in respect of the then most recent three (3) payment periods, such Defaulting Contributor shall cause the undrawn principal amount of such Credit to be increased in accordance with this Section 4.8.

 

(d) In the event that the undrawn principal amount payable under any Credit issued on account of a Defaulting Contributor at any time shall be greater than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures, as notified to such Defaulting Contributor by the CFA in accordance with these Procedures, the Defaulting Contributor on whose behalf such Credit has been issued shall be entitled to request the CFA to consent, and the CFA shall consent, to the reduction in the undrawn principal amount payable under such Credit, such that the undrawn principal amount of the Credit respecting such Defaulting Contributor's obligations hereunder shall be not more than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods.

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ARTICLE FIVE

 

RESPONSIBLITIES OF THE CFA

  5.1 The CFA is responsible for the operation of the National Contribution Fund under the administration of the CPCC. In particular the CFA:
 

· receives all contribution reporting and payments to the National Contribution Fund;

 

· calculates and manages all the disbursements from the National Contribution Fund;

 

· is responsible for all banking functions related to the National Contribution Fund; and

 

· is responsible for maintaining the TSP User Manual and for ensuring all updates to the guide are distributed to all TSPs that either contribute or receive funds from the National Contribution Fund.

  5.2 In accordance with Sections 4.1, 4.2 and 4.4, the CFA is responsible to maintain accurate records of all Required Contributors in any particular year, and ensure that monthly reporting and payment to the National Contribution Fund is completed by each Required Contributor. The CFA will provide monthly a report to the CRTC and the CPCC in regard to Required Contributors not reporting monthly as required in Section 4.1. Upon the occurrence of a Required Contributor not reporting monthly, the CFA will proceed, with the direction of the CPCC, in accordance with Section 11.01 of the National CFA Agreement. This process will not affect, however, the obligation of such delinquent Required Contributor to provide security to the CFA, in accordance with the provisions of Section 4.8 or the right of the CFA to realize upon security so provided.
  5.3 Upon receiving the monthly contribution reports in accordance with Section 3.1 from the Required Contributors, the CFA will provide a Payment and Receipt Advice to each such Required Contributors identifying the amount required for payment to the National Contribution Fund and the expected payment date. The payment will be transferred to the CFA based on the procedures set forth in the TSP User Manual in accordance with the schedule specified in Section 4.4.
  5.4 The CFA is authorized to deduct from the National Contribution Fund the CFA Payment as and when the CFA Payment is payable to the CFA. The CFA will also, from time to time, pay the Consortium Costs to the Consortium from the National Contribution Fund upon receipt by the CFA of certificate from an officer of the Consortium stating the amount and nature of the Consortium Costs in respect of the period specified in such certificate.
  5.5 For the year 2001, the funds remaining in the National Contribution Fund will be distributed to Territorial Central Sub-funds based on percentages established by the CRTC.
  5.6 For 2001, before distribution to the local exchange carriers in each territory, the CFA will distribute to Northwestel the monthly amounts as prescribed in Decision 2000-746 from the Territorial Central Sub-funds. The Territorial Central Sub-funds for SaskTel, Télébec and Québec-Téléphone will be excluded from the distribution for Northwestel. The monthly deductions are listed below:
   

2001
($M)

Monthly
($)

 

Newfoundland

0.572

47,634

 

Nova Scotia

1.023

85,263

 

Prince Edward Island

0.140

11,647

 

New Brunswick

0.548

45,692

 

Ontario/Quebec

4.420

368,376

 

Manitoba

0.618

51,516

 

Alberta

3.652

304,317

 

British Columbia

4.127

343,888

 

Total

15.100

1,258,333

  5.7 For 2001, the remaining funds in each of the Territorial Central Sub-funds will then be apportioned by average NAS and by band and distributed to the local exchange carriers eligible for subsidy, using the formula prescribed by the CRTC in Decision 97-8 and subsequent procedures. With regard to the SaskTel, Télébec and Québec-Téléphone Territorial Central Sub-funds, the entire amount remaining will be paid respectively to SaskTel, Télébec and Québec-Téléphone.

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  5.8 As set out in the schedule in Section 4.4, the CFA will report to the Eligible Recipients from each of the Territorial Central Sub-funds the amount of their net payment to or from the fund. The Eligible Recipients who are net payers to the fund as Required Contributors will transmit to the National Contribution Fund the net payment amount as reported by the CFA three (3) days after receiving the CFA report (CFA 2) based on the payment procedures set forth in the TSP User Manual.
  5.9 On or before the prescribed date in Section 4.4, the CFA will distribute the remaining funds in the National Contribution Fund to the Eligible Recipients in accordance with the payment procedures set forth in the TSP User Manual. In the event that all funds have not been received from the Required Contributors, the CFA will rerun the process to include only the funds that have been received. Required Contributors that have not provided the contributions as required on the date specified will be assessed Late Payment Charges and a rerun penalty of $2,000 to be applied against the Required Contributors not so providing. No payments to an Eligible Recipient will be processed until such time as all previous amounts outstanding and all Late Payment Charges and penalties assessed have been cleared. As with other contributors, the process described in Section 5.2 will be followed to identify deficient Required Contributors to the CRTC and the CPCC.
  5.10 Late payments to the NCF will be subject to Late Payment Charges applied to any amounts in default commencing on the relevant due date and compounded monthly. Late payment charges received by the CFA will be processed through the NCF in the month that the charges are received.
  5.11 The CFA will hold all information received by it, pursuant to these Procedures, in confidence, in accordance with the provisions of Section 10.06 of the National CFA Agreement. Notwithstanding this, the CFA will report on a total basis for the entire National Contribution Fund:
 

· the total of the revenues and deductions from revenues prescribed by the CRTC on the Reporting Form For The Calculation Of The Contribution-Eligible Revenues;

 

· total contribution into the NCF;

 

· expenses of the NCF (includes CFA service fee, administrative expenses, audits, contracts, and CPCC expenses);

 

· total disbursements to Northwestel; and

 

· total disbursements of contribution from the NCF and to the Eligible Recipients that participate in the NCF.

 

The CFA may also report to the CRTC, in confidence, any information requested by the CRTC.

  5.12 Notwithstanding Section 5.11 above, the CFA, on its own initiative, may report information to the CRTC in confidence:
 

· to report any apparent discrepancy in the information reported to it; and

 

· to report any situation where information has not been reported that might reasonably be expected to have been reported.

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  5.13 The CFA will, on its own initiative, request from the CPCC clarification of issues related to the overall operation of the NCF and including:
 

· for the purpose of clarifying the correct operation of the NCF; and

 

· to report any apparent discrepancy in the operation of the NCF.

  5.14 For 2002, in accordance with Decision 2000-745, paragraph 119, payments out of the National Contribution Fund to Eligible Recipients by the CFA will be governed by the new banding structure and subsidy requirements methodology for high-cost serving areas established by the CRTC in Restructured bands, revised loop rates and related issues, Decision CRTC 2001-238, dated 27 April 2001.
 

ARTICLE SIX

 

ADJUSTMENTS TO THE FUND OR
REVENUE PERCENTAGE CHARGE

  6.1 For 2001, the transition occurs between the Per-Minute Regime and Revenue Percentage Charge process as described above. This transition, due to the timing of Decision 2000-745, requires an adjustment of payments made for the period 1 January 2001 to 31 March 2001, which are being completed based on the Per-Minute Regime. In addition, there is a requirement for an orderly closure of the Per-Minute Regime in terms of processing information for the year 2000 and the final audit of all information required by the Existing CFA Agreements. The following processes were developed and agreed upon as consensus items through the contribution collection mechanism ("CCM") subgroups.
  6.2 Adjustment: For the traffic period 1 January 2001 to 31 March 2001, payments by TSPs to the National Contribution Fund are based on the Per-Minute Regime, however the Revenue-Based Contribution Regime is effective on 1 January 2001. This requires a calculation of the adjustment between the two contribution processes to ensure all Required Contributors effectively make the appropriate payment to the National Contribution Fund based on the Revenue-Based Contribution Regime. The adjustment process developed is described below and the appropriate reporting form is contained in Appendix 4 of this document.
  6.3 Reconciliation data :
 

· LEC responsibility: LECs that have invoiced, collected and reported contribution from IXCs, resellers, rebillers, or wireless companies or any other TSP for traffic during the period of 1 January 2001 to 31 March 2001 will complete a reconciliation with each of the TSPs to determine the amount of contribution which has been invoiced and collected.

 

· TSPs responsibility: In order to complete an orderly and timely reconciliation the TSPs that have received invoices for contribution from a LEC for the traffic period of 1 January 2001 and 31 March 2001 are responsible to assist the LECs in completing the reconciliation.

 

· Jointly, the LECs and TSPs will file with the CFA a reconciliation report as to the amount of contribution invoiced by the LEC and amount of contribution paid by the TSP for each calendar month for the traffic period 1 January 2001 through 31 March 2001 using form CFA 1 (see Appendix 4). Both the relevant LEC and the relevant TSP are required to sign the reconciliation report before filing with the CFA. Contribution amounts for the 1 January 2001 through 31 March 2001 traffic period that are received by the LEC after 31 May 2001 will, provided that the TSP has complied with the revenue reporting requirements, be returned by the LEC to the TSP consistent with, to the degree possible, the schedule by which the CFA will be issuing adjustments (see below). Such amounts will not be included in the amounts reported in form CFA 1. The LEC will ascertain the TSP's compliance with the revenue reporting requirements through a request to the CFA.

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· To assist in the reconciliation, the LECs will assemble, for each TSP, per-transaction information (i.e., per invoice and per receipt) relating to contribution invoiced for the traffic period 1 January 2001 to 31 March 2001 and the amounts received, as well as any other information (e.g. exemptions, credits, billing adjustments, etc.) that would be used to determine the reconciled amounts. TSPs are encouraged to assemble similar information to assist in the reconciliation.

  6.3.1 Revenue Percentage Charge Calculations: For the period 1 January 2001 to 31 March 2001, all TSPs designated as Required Contributors to the National Contribution Fund under the new Revenue-Based Contribution Regime will complete and submit to the CFA the Revenue Reporting form for the period 1 January 2001 through 31 March 2001. This form will be completed in accordance with these Procedures as stated in Articles 4 and 5 above.
  6.3.2 CFA responsibility: The CFA will obtain all the CFA 1 reporting forms identified in Section 6.3 and the revenue reporting forms identified in Section 6.3.1 from all TSPs and produce a reconciliation of the amount each TSP either owes the NCF or is owed from the NCF. This information will be reviewed and audited by the Auditor for completeness and accuracy:
 

· Once completed, the CFA will report to each TSP the net amount that is either owed by the TSP to the NCF, or the amount that the NCF owes the TSP for the period 1 January 2001 through 31 March 2001. The TSP will have twenty (20) business days to dispute the amount reported by the CFA; any such dispute to be communicated in writing to the CFA within such period; and

 

· Once all disputes are resolved, the CFA will prorate the amount of payments to and from the NCF until the end of the year as per the clarification from the CRTC as of 2 March 2001.

  6.3.3 Schedule of events: The following schedule of events has been established:
 

· 30 June 2001 -LECs and TSPs to file with the CFA jointly prepared statements of contribution payments made by each TSP during the period 1 January 2001 through 31 March 2001 - Section 6.3 above. If a reconciliation between a LEC and a TSP has not been accomplished by this date, once reconciled, and provided that the TSP has complied with the revenue reporting requirements, contribution amounts will be returned by the LEC to the TSP consistent with, to the degree possible, the schedule by which the CFA will be issuing adjustments (see below). Such amounts will not be included in the amounts reported in form CFA 1. The LEC will ascertain the TSP's compliance with the revenue reporting requirements through a request to the CFA;

 

· 30 June 2001 - TSPs identified as Required Contributors and Eligible Recipients, as per the Revenue Percentage Charge procedures, will submit the revenue and Network Access Service counts reporting forms for the months of January, February and March, 2001 to the CFA - Section 6.3.1 above;

 

· 31 July 2001 -CFA to complete the calculation of the adjustments required for each TSP and have the Auditor review the results. CFA to issue to all TSPs an adjustment statement detailing the amounts owed or to be received;

 

· 28 August 2001 - All disputes of CFA information from the TSPs to be identified;

 

· 11 September 2001 - Finalize all adjustments with completion of disputes and issue statements to each TSP;

 

· 15 September 2001 - 1st adjustment payments to the NCF due from TSPs; and

 

· 18 September 2001 - 1st adjustment payment from the NCF to the TSPs.

 

Adjustment payments to and from the National Contribution Fund will follow the same schedule for October, November and December 2001.

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ARTICLE SEVEN

 

COMPLIANCE STATEMENTS and AUDIT REQUIREMENTS

  7.1 Compliance statements and audit requirements set forth in this Article have been developed through the consensus report process referred to in Section 1.3. There are two potential obligations for a TSP under the Revenue-Based Contribution Regime. Although both will require either a compliance statement or audit requirement, there are distinct rules for each.
 

a) Obligation 1 with the CRTC for the annual filing-

 

TSPs with audited financial statements are to submit audit reports to the CRTC, with the annual filing, on or before March 31. TSPs that do not have audited financial statements are required to provide an affidavit, signed by an officer of the company, attesting to the accuracy of the information (including NAS information). The details for this filing requirement are found in Section 7.2;

 

b) Obligation 2 with the Auditor (i.e., auditor of the National Contribution Fund) for the audit of the National Contribution Fund-

 

i) Required Contributors with $10 million or more of annual Contribution-Eligible Revenues are to submit audit reports to the Auditor in accordance with the National CFA Agreement. Required Contributors with less than $10 million of Contribution-Eligible Revenues may provide an affidavit, signed by an officer of the company, attesting to the accuracy of the information.

 

ii) Eligible Recipients are to submit to the Auditor an auditor's opinion or affidavit on NAS reports.

 

The details for the filing requirement with the Auditor are found in Section 7.3.

 

Audit reports will be prepared in accordance with Generally Accepted Auditing Standards as defined by the Canadian Institute of Chartered Accountants by an external auditor and based on either Section 5805 or 9100 of the Handbook of the Canadian Institute of Chartered Accountants. Where a reporting TSP is incorporated in a country other than Canada, the audit should be conducted in accordance with the applicable auditing standards of that country.

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  7.2 In paragraph 104 of Decision 2000-745, the CRTC has directed that each TSP file an audit report, by its external auditors, with its annual filing on or before 31 March (30 April 2001 with respect to year 2000 revenues), for the fiscal year ending in the immediate prior calendar year. TSPs that do not have audited financial statements must provide an affidavit signed by an officer of the company attesting to the accuracy of the information, in lieu of providing an audit report. The audit report or affidavit is required by the CRTC to ensure the integrity of the contribution amounts reported and the use of such information to determine which companies will be required to pay contribution and calculate the annual Revenue Percentage Charge for each year. The following rules apply with regard to the audit report or affidavit for the CRTC.
  7.2.1 This audit report, or affidavit, is to be on a non-consolidated basis, but a related group of TSPs may file on a consolidated basis. If the audit report is on a consolidated basis, it must be accompanied by an individual report for each TSP subject to the contribution regime established by the CRTC in Decision 2000-745.
  7.2.2 Each TSP will file a report on or before 31 March (30 April 2001 with respect to year 2000 revenues) showing the total Contribution-Eligible Revenue for its fiscal year ending in the immediate prior calendar year, in the format that is contained in these procedures or changed by the CRTC from time-to-time.
  7.2.3 Each TSP claiming a subsidy for eligible NAS will file a report on or before 31 March showing the total eligible NAS by band for each month of the fiscal year ending in the immediate prior calendar year, in the same format as that used for the filing of this information on a monthly basis.
  7.2.4 The auditor will give his opinion on whether the annual report of Contribution-Eligible Revenues and, where applicable, NAS by band are presented fairly in accordance with the definitions approved by the CRTC for the preparation of these reports.
  7.2.5 As indicated in Decision 2000-745, TSPs that are permitted to file an affidavit instead of an audit report will file an affidavit signed by an officer of the company attesting to the fact that the information filed has been presented fairly in accordance with the definitions approved by the CRTC for the preparation of these reports.
  7.2.6 A copy of the audit report, or affidavit, will be filed with the CRTC each year on or before 31 March (30 April with respect to year 2000 revenues).
  7.2.7 A sample of the audit report is contained in Appendix 2 - Sample 1 of these Procedures. A sample of the form of affidavit is contained in Appendix 3 of these Procedures.
  7.3 In accordance with the National CFA Agreement, Required Contributors, TSPs with $10 million or more of annual Contribution-Eligible Revenues, are required to file an audit report with the Auditor attesting to the accuracy of the monthly contribution reports submitted to the CFA during the immediate prior calendar year. In addition, Eligible Recipients are required to file an opinion from an external auditor attesting that the NAS reported to the CFA are presented in accordance with the definitions approved by the CRTC for the preparation of these reports. Required Contributors that are non-related individual TSPs with less than $10 million of annual Contribution-Eligible Revenues may provide an affidavit signed by an officer of the company attesting to the accuracy of the information, in lieu of providing an audit report. The audit report or affidavit is required by the Auditor to perform its annual audit on the National Contribution Fund. The following rules apply to the audit report or affidavit for the Auditor.
  7.3.1 This audit report, or affidavit, must be on a non-consolidated basis by each Required Contributor and Eligible Recipient.
  7.3.2 Each Required Contributor shall file a report on or before the approved date showing the total Contribution-Eligible Revenues for the immediate prior calendar year, in the same format as that used for the filing of this information on a monthly basis.
  7.3.3 Each Eligible Recipient shall file a report on or before the approved date showing the total eligible NAS by band for each month of the immediate prior calendar year, in the same format as that used for the filing of this information on a monthly basis.
  7.3.4 TSPs that are permitted to file an affidavit instead of an audit report will file an affidavit signed by an officer of the company attesting to the fact that the information filed has been presented fairly in accordance with the definitions approved by the CRTC for the preparation of these reports.
  7.3.5 A copy of the audit report and opinion on NAS reports or affidavit will be filed with the Auditor and with the CRTC on or before the approved date.
  7.3.6 The approved date for the filing of the audit report or affidavit has been set at 90 days after the final reporting period for the year being reviewed.
  7.3.7 A sample of the audit report has been included in Appendix 2 - Sample 2 of these Procedures. A sample of the form of affidavit is contained in Appendix 3 of these Procedures.

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ARTICLE EIGHT

 

CLOSURE OF THE PER-MINUTE REGIME TO REVENUE-BASED REGIME RELATED TO 2001

  8.1 Version 3 Processing: The completion of all processing of 2000 data under the Per-Minute Regime will be completed by 28 June 2001 with final payouts by 15 July 2001.
  8.2 Audits: Audits required by the Existing CFA Agreement will be completed for:
 

· 5805 Audits: Would be required by all LECs as per the Existing CFA Agreements. The 5805 would be delayed to incorporate the Version 3 processing date and would be submitted by the LECs 90 days after the final Version 3 submissions or by 27 October 2001, whichever date is earlier; and

 

· 5900 Audits: Would only be completed by all ILECs or significant CLECs reporting to the fund. As identified by the CFA, this would impact 3 companies, i.e. 2 ILECs and 1 CLEC that would be required to submit the 5900 Audits. The CFA will contact and inform the applicable LECs of the requirement for the audit.

 

Appendix 1

 

CRTC REVENUE-BASED CONTRIBUTION REGIME -
REPORTING FORM

 

Table of contents

 
 

-1- Introduction

 
 

-2- Annual filing requirements

 
 

-3- Related companies

 
 

-4- Compliance statement

 
 

-5- Monthly filing requirements

 
 

-6- Completing the forms

 
 

-7- Reporting form

 
 

-8- Inter-carrier payments form

 
  -9- Non-contribution-eligible revenues reporting form  
 

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-1- Introduction

 

On 30 November 2000, the Commission issued Decision CRTC 2000-745 introducing major changes to the Canadian contribution regime. In the decision, the Commission decided that it would introduce a national contribution collection mechanism based upon revenues from all telecommunications service providers ("TSPs"), who meet the minimum threshold of $10 million in Canadian Telecommunications Services Revenues ("CTSR"), and replaced the per-minute mechanism effective 1 January 2001. Contribution serves to subsidize the high cost of residential local telephone service in rural and remote areas. The revenue charge is set annually and is based upon the Contribution-Eligible Revenues of the previous year. Monthly remittances based upon the previous month's actual revenues will be made to the Central Fund Administrator (CFA) and distributed to those TSPs serving high-cost serving areas as determined by the CRTC. Refer to Decision 2000-745, Orders CRTC 2001-220, 2001-221 and 2001-288 for further clarification.

 

-2- Annual filing requirements

 

Paragraph 103 of Decision 2000-745 requires that all TSPs are now required to report to the Commission, each 31 March, their Contribution-Eligible Revenues based upon the financial statements of the fiscal year ending within the immediate prior calendar year. The reporting form referred to in paragraph 102 of the decision is attached. The following supporting documentation must be provided: (i) the relevant financial statements; (ii) the associated audit report or affidavit, as applicable (see below); (iii) a list of the inter-carrier payment deductions claimed, broken down by supplier, services purchased and the associated expense (see inter-carrier payment deduction form attached); and (iv) details of all Non-Contribution-Eligible Revenues (see attached form). This information may be filed in confidence with the Commission. A list of all filers will be available on the CRTC Website at http://www.crtc.gc.ca. The annual percent revenue charge will be determined following the receipt of the annual filing requirements. The interim 2001 revenue charge is 4.5%.

 

-3- Related companies (Note 1)

 

Companies making monthly or annual filings on behalf of a group of related companies that are TSPs are also required to file separate reports with supporting information for each company that is a TSP. When filing your annual reporting form, a list of all related companies that are TSPs is required, whether or not the companies file separately or as a group. Please note that the minimum threshold of $10 million in CTSR applies to the group of related companies that are TSPs. The definition of related companies can be found in Section 3840 of the Handbook of the Canadian Institute of Chartered Accountants.

 

-4- Compliance statement

 

If the TSP, or group of related companies that are TSPs, has over $10 million in Contribution-Eligible Revenues, a compliance statement completed by the company's external Auditors, as outlined in the process guidelines (see CRTC website at http://www.crtc.gc.ca), must be filed attesting to the accuracy of the annual filing and revenue report. Those companies that do not have audited financial statements, or non-related companies with $10 million or less of annual Contribution-Eligible Revenues, can either have their external auditors attest to the accuracy of the information or provide an affidavit signed by an officer of the company attesting to the accuracy of the information.

 

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-5- Monthly filing requirements

 

TSPs that meet the minimum revenue threshold, and therefore must pay contribution on their Contribution-Eligible Revenues, are required to file and remit monthly to the Central Fund Administrator (CFA). The CFA is currently Progestic International Inc. If a company is making one remittance for a related group of companies that are TSPs, the financial information must be reported separately for each company. The process guidelines will provide further information regarding audit and filing requirements. The monthly report will require the same information as the annual reporting form subject to the following two exceptions. The details of inter-carrier payments and Non-Contribution-Eligible Revenues and the list of related companies are not required to be filed on a monthly basis. However, if the list of related companies changes at any time, the new information (the name of a newly related company, or the fact that a company is no longer related) must be communicated to the CRTC immediately. The CRTC will be providing a list of TSPs who are required to remit contribution as well as an estimate of expected contribution to be remitted on a monthly basis to the CFA. The CFA will monitor the compliance with the monthly reporting requirements of the TSPs.

 

-6- Completing the forms

 

Annually, on 31 March, each TSP is required to file the Annual Reporting Form, the supporting documentation as detailed above, the Inter-Carrier Payment Form (if applicable) and the Non-Contribution-Eligible Revenues Form (if applicable). As well, a list of all related companies who are TSPs must be completed. This requirement applies whether or not the TSP meets the minimum threshold of $10 million in CTSR.

 

Area A: Company identification

 

Enter the legal name of the entity as well as the normal operating name of the TSP. Provide the names of any related companies that are TSPs. A list may be attached, if required.

 

Area B: Contact information

 

Enter the name of the person completing the form. This should be the person whom the Commission would be able to contact with any questions. Please provide the contact numbers and email address.

 

Area C: Reporting year information for annual filings (Note 2)

 

The reporting year for the annual filings is the calendar year, which ended immediately prior to the report being filed at 31 March. The fiscal year information is your company's fiscal year, which ended in the reporting year. For example, for the reporting form to be filed by 31 March 2002, the reporting year would be 2001 and you would provide the fiscal year information that ends in the calendar year 2001.

 

Area D: Calculation of Contribution-Eligible Revenues

 

The revenue information required in this section is based upon Decision 2000-745 and further clarifications provided in Orders 2001-220 and 2001-221, both dated 15 March 2001.

 

Note 3: Order 2001-220 contains the definitions of Total Operating Revenues, Non-Canadian Revenues, Canadian Telecommunications Services Revenues ("CTSR"), Contribution Payments Received, Retail Internet Service Revenues, Retail Paging Services Revenues. In addition, that order contains the procedure for calculating the contribution-eligible and Non-Contribution-Eligible Revenues from bundles. Order 2001-221 contains the definitions of Canadian Non-telecommunications Revenues, Terminal Equipment Revenues and Bundles. For clarification of Line D.1.B., refer to the definition of Total Operating Revenues.

 

Note 4: Inter-carrier payments are defined in Order 2001-220. The total allowable inter-carrier payments should be reported in Line D.6. In accordance with paragraph 102 of the decision, this deduction must be supported by a list of suppliers, services purchased and the associated expense. The INTER-CARRIER PAYMENTS FORM is attached.

 

Note 5: Bundled revenues - The term bundling generally refers to a situation where one rate covers a number of products and/or services. If a bundle includes Contribution-Eligible Revenues and Non-Contribution-Eligible Revenues, the bundling rules apply as per Orders 2001-220 and 2001-221. To ensure that revenues are appropriately recorded to respect the minimum threshold, revenues associated with bundles should be reported as per the three situations outlined below:

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  (i) Contribution-eligible and Non-Contribution-Eligible Revenues in a bundle
 

(a) If the bundle contains Contribution-Eligible Revenues and Non-Contribution-Eligible Revenues from "Retail Internet Services", "Retail Paging Services" and/or "Terminal Equipment", enter the amount of revenues eliminated from bundles that are non-contribution-eligible in Line D.10. This amount eliminated from bundles as Non-Contribution-Eligible Revenues is not to be included in any other line in the form as a deduction.

 

(b) If the bundle contains Contribution-Eligible Revenues and Non-Contribution-Eligible Revenues that would normally be reported in Lines D.2 and/or D.3, enter the amount of revenues eliminated from bundles that are Non-Contribution-Eligible in Lines D.2 or D.3 as applicable. If the bundle includes Contribution-Eligible and Non-Contribution-Eligible Revenues that would normally be reported in D.2, D.3, D.7, D.8 and/or D.9 and the Non-Contribution-Eligible Revenues cannot be separated, you may report all revenues from the Non-Contribution-Eligible Revenues in Line D.10. For greater clarification, Non-Contribution-Eligible Revenues that would normally be reported in Lines D.7, D.8 and/or D.9 cannot be reported in Lines D.2 and/or D.3.

  (ii) Bundle of Non-Contribution-Eligible Revenues only - If the bundle includes only Non-Contribution-Eligible Revenues, the revenues should be prorated in a similar manner as set out in Order 2001-220, to the appropriate section on the form. For example, if the bundle contains only "Retail Internet Services" and "Terminal Equipment Revenues", the revenues would be prorated and reported in Lines D.7 and D.9 respectively. If the bundle contains only "Canadian Non-telecommunications Revenues" and "Retail Internet Services Revenues", the revenues would be prorated and reported in Lines D.3 and D.7 respectively. If the bundle includes Non-Contribution-Eligible Revenues that would normally be reported in D.2 or D.3 with Non-Contribution-Eligible Revenues from D.7, D.8 and/or D.9 and the Non-Contribution-Eligible Revenues cannot be separated, you  may report all revenues from the Non-Contribution-Eligible Revenues in Line D.10. For greater clarification, Non-Contribution-Eligible Revenues that would normally be reported in Lines D.7, D.8 and/or D.9 cannot be reported in Lines D.2 and/or D.3.
  (iii) Contribution-Eligible Revenues represent less than 5% of the bundle - If the bundle contains Non-Contribution-Eligible Revenues that would be reported in Lines D.2 or D.3 and Contribution-Eligible Revenues representing less than 5%, enter the revenues from the entire bundle in Lines D.2 or D.3 as applicable (including the immaterial portion of Contribution-Eligible Revenues). If the bundle contains Non-Contribution-Eligible Revenues that would be reported in Lines D.7, D.8 or D.9 and Contribution-Eligible Revenues representing less than 5%, enter the revenues from the entire bundle in Lines D.7, D.8 or D.9 as applicable (including the immaterial portion of Contribution-Eligible Revenues). If the bundle contains more than one Non-Contribution-Eligible service, the revenues should be prorated between the Non-Contribution-Eligible Revenues in a similar manner as outlined in Order 2001-220. If the revenues cannot be separated, all of the Non-Contribution-Eligible Revenues can be put in Line D.10. If the total of the Contribution-Eligible Revenues and the Non-Contribution-Eligible Revenues that would normally be reported in Lines D.7, D.8 and/or D.9 represents less than 5% of the bundle, you may report the total revenues from the bundle in Line D.2 or D.3 as applicable.
 

All deductions for Non-Contribution-Eligible Revenues must be itemized by type of service and associated revenues (see NON-CONTRIBUTION-ELIGIBLE REVENUES FORM attached).

 

Note 6: Contribution-Eligible Revenues from package discounts - In accordance with Order 2001-221, if two or more services are offered in a package where the Contribution-Eligible Revenues are discounted and the Non-Contribution-Eligible Revenues are higher than the stand-alone price, the difference between the price charged for the non-contribution-eligible service and the stand-alone price is contribution-eligible. Report this excess in Line D.12.

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CRTC REVENUE-BASED CONTRIBUTION REGIME -
REPORTING FORM FOR THE CALCULATION OF
THE CONTRIBUTION-ELIGIBLE REVENUES

Area A: Company identification

A.1

Legal name of entity

A.2

Name under which the telecommunications service provider (TSP) carries on business

A.3

List of related TSPs (provide separate list if required) (Note 1)

Area B: Contact information

B.1

Person who completed this form

B.2

Title of position

B.3

Telephone number

B.4

Fax number

B.5

Email address

Area C: Reporting year information - Attach copy of relevant financial statements

C.1

Reporting year (Note 2)

C.2

Fiscal year end

Area D: Calculation of Contribution-Eligible Revenues (Note 3)

D.1.A

Total Operating Revenues reported in financial statements

D.1.B

Add deductions from revenues

D.1

Total Operating Revenues for contribution purposes

LESS

D.2

Non-Canadian Revenues

D.3

Canadian Non-telecommunications Revenues

D.4

Canadian Telecommunications Services Revenues

(D.1-D.2-D.3)

LESS

D.5

Contributions payments received

D.6

Inter-carrier payments (Note 4)

D.7

Retail Internet Service Revenues

D.8

Retail Paging Service Revenues

D.9

Terminal Equipment Revenues

D.10

Non-Contribution-Eligible Revenues eliminated from those bundles to which both contribution-eligible and non-eligible revenue are attributed (Note 5)

D.11

Subtotal D.5+D.6+D.7+D.8+D.9+D.10

ADD

D.12

Contribution-Eligible Revenues on package discounts (Note 6)

D.13

Contribution-Eligible Revenues D.4-D.11+D.12

 

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CRTC REVENUE-BASED CONTRIBUTION REGIME - ANNUAL REPORTING

 

INTER-CARRIER PAYMENTS FORM

 

Provide the following details of the inter-carrier payment deduction claimed on Line D.6 of the Annual Reporting Form. Add additional forms as required.

 

Note: Not required to be filed monthly with the CFA.

Supplier

Services purchased

Expense

Total


 

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CRTC REVENUE-BASED CONTRIBUTION REGIME - ANNUAL REPORTING

 

NON-CONTRIBUTION-ELIGIBLE REVENUES REPORTING FORM

 

Provide details of Non-Canadian Revenues on Line D.2, Canadian Non-Telecommunications Revenues claimed on Line D.3 and Non-Contribution-Eligible Revenues removed from bundles claimed on Line D.10 of the Annual Reporting Form.

 

Note: Not required to be filed monthly with the CFA

Line number

Type of service/Product

Associated revenues

Total


 

Signature ______________________

 

Date ________________________

 

Appendix 2

 

SAMPLES OF AUDIT REPORTS

 

Sample 1 - Audit report required for 31 March annual filing with the CRTC.

 

AUDITOR'S REPORT ON SCHEDULE OF CONTRIBUTION-ELIGIBLE REVENUE

 

To the Board of Directors of

 

Client Limited:

 

At the request of Client Limited, I have audited the reporting for the calculation of the contribution-eligible revenues for the year ended Month, Day, Year. This financial information is the responsibility of the management of Client Limited. My responsibility is to express an opinion on this financial information based on my audit.

 

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial information.

 

In my opinion, this schedule presents fairly, in all material respects, the Contribution-Eligible Revenues of Client Limited for the year ended Month, Day, Year in accordance with Decision CRTC 2000-745 and related orders.

 

City

(signed)

 

Date

CHARTERED ACCOUNTANT

 

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Appendix 2

 

SAMPLES OF AUDIT REPORTS

  Sample 2 - Example of Audit Report required for filing with National Contribution Fund Auditor annually.
 

AUDITORS' REPORT ON THE CENTRAL FUNDS ADMINISTRATION INPUT REPORTS

 

To the Board of Directors of

 

XYZ Company

 

We have audited the attached Schedules of XYZ Company for the year ended 31 December 2001 calculated in accordance with the National Central Funds Administration Agreement. This financial information is the responsibility of the management of XYZ Company. Our responsibility is to express an opinion on this financial information based on our audit.

 

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial information.

 

In our opinion, the attached Schedules present fairly, in all material respects, the Contribution-Eligible Revenues [and the Network Access Services counts] for XYZ Company for the year ended 31 December 2001 in accordance with the definitions described in the CRTC Decision 2000-745, Changes to the contribution regime, and related orders therein, and the National Central Funds Administration Agreement.

 

City

(Signature)

 

Date

Chartered accountants

 

Appendix 3

 

FORM OF AFFIDAVIT

 

IN THE MATTER OF REPORTING OF CONTRIBUTION-ELIGIBLE
REVENUES FOR THE PURPOSES OF CALCULATING CONTRIBUTION
UNDER DECISION CRTC 2000-745

 

AFFIDAVIT

 

I, _________________________________(individual's name), OF THE _____________________________(City/Town, etc.) OF _________________________ MAKE OATH AND SAY AS FOLLOWS:

 

1. I have personal knowledge of the matters hereinafter deposed to except where stated to be based on information and belief and where so stated I verily believe the same to be true.

 

2. As of the date of this Affidavit, I am __________________(corporate title) of the telecommunications service provider _______________________ (provide legal name of corporation), a company that carries on business as _______________________(where applicable).

 

3. Attached as Exhibit(s) "X" to this my affidavit is the Annual Reporting Form, and supporting financial information and reports, of _______________________ (legal name of telecommunications service provider) filed with the Commission in accordance with its obligations pursuant to Decision CRTC 2000-745, Changes to the contribution regime, 30 November 2000, (Decision 2000-745).

 

4. The Annual Reporting Form and supporting financial information and reports, attached as Exhibit(s) "X", are in compliance with the determinations, procedures and guidelines of the Canadian Radio-television and Telecommunications Commission ("CRTC") as set out in Decision 2000-745, Orders CRTC 2001-220 and 2001-221, the CRTC Revenue-Based Contribution Regime Reporting Instructions and any other subsequent procedures or directions issued or approved by the CRTC from time to time.

 

5. The information contained in Exhibit(s) "X" is accurate and true.

 

SWORN BEFORE ME )

 

at the City of ______________ )

 

in the Province of __________ )

 

this ____ day of ___________ 2001. )

________________________ )
(signature of affiant)

 

_______________________ )
a Commissioner, etc. )

 

PROCI-8A

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Appendix 4

Phase 1 -- 1st Quarter 2001 Reconciliation

Rec CFA 1-IXCs, WSPs, resellers & LECs

RECONCILIATION OF CONTRIBUTION REPORTED ON MINUTE OF USE
REPORTED ON A MONTHLY BASIS

LEC:

TSP:

Note: This form requires LEC and TSP agreement on amounts.

Traffic period

Contribution invoiced by LEC to TSP and reported by LEC to CFA
($)


Contribution paid by TSP to LEC
($)

January 1 - January 31

February 1 - February 28

March 1 - March 31


Authorized approvals

LEC

TSP

Name:

Name:

Position:

Position:

Telephone:

Telephone:

Signature:

Signature:

Date:

Date:

Date Modified: 2001-09-21

Date modified: